Audit Committee
6 March 2012
Agenda Item No_____12________
Audit Committee Self assessment 2011-12
Summary:
This report outlines the findings of the recent self assessment exercise
undertaken by Members of the Committee. It provides an analysis of
the assessment and identifies a number of actions in respect of the
responses.
Conclusions:
By addressing the questions in the self assessment that elicited a
“No” answer and reviewing those where the consensus was split (“?”)
it is anticipated that the work and output of the Committee will be
strengthened and enhanced.
Recommendations:
That members note the content of this report and commission Officers
to provide the improvements noted in section eight (Actions)
Cabinet member(s):
Wards:
All
All
David Ablett,
Contact Officer,
01263-516055,
telephone number,
david.ablett@north-norfolk.gov.uk
and e-mail:
1. Introduction
1.1. The audit committee self assessment process is designed to identify how well audit
committees apply good practice in supporting the review of the functions of the
authority.
1.2. The Chartered Institute of Public Finance and Accountancy (CIPFA) in its document
Audit Committees – Practical Guidance for Local Authorities identifies that good
corporate governance requires independent, effective assurance about the adequacy of
financial management and reporting and that this assurance is best delivered by an
audit committee independent of the Executive and Scrutiny functions.
1.3. In completing this self assessment it must be remembered that most committee
members are new to this role and have joined the audit committee for the first time
since the May 2011 election. A copy of the consolidated self assessment is attached as
appendix 1 to this report.
Audit Committee
6 March 2012
1.4. In summary therefore the recent self assessment by Members of the Committee
returned the following consolidated results:
Number
of
questions
Area
Yes
?
No
Establishment, Operation and Duties
22
19
Internal Controls
11
9
2
4
3
1
Financial, Reporting and Regulatory
Matters
7
3
Internal Audit
10
9
External Audit
7
6
Administration
9
8
1
66
55
7
Total
1
4
2. Establishment, operation and duties
2.1. Roles and remit - Members on the whole seemed happy with this section. The review of
the constitution and the revision of the Audit Committee’s own Terms of Reference will
ensure that the work of the Committee complements the aims and ambitions of Full
Council.
2.2. Membership induction and training – The “No” responses here relate to the questions
on both induction and training. The general feeling was that new members needed a
greater exposure to not only the work of this committee but the overall governance
arrangements of the Council.
2.3. Meetings - It was suggested that the frequency of the meetings could be revised in the
light of the current work load. Audit Committee meeting attendance has been patchy in
this first year of the new Council. The Chair has already taken steps to resolve some of
these issues.
3. Internal Control
3.1. The main issue here relates to the adoption of Managing the Risk of Fraud – Actions to
Counter Fraud and Corruption and that actions to counter fraud and corruption are
being implemented. This needs to be clarified from oversight of the risk management
process to implementation of anti fraud and corruption actions.
4. Financial reporting and regulatory matters
4.1. In the main the comments in this section of the self assessment exercise reflect the
newness of committee members to local government generally.
4.2. Review of the accounting policies contained in the Statement of Accounts is part of the
approval of those accounts undertaken annually by the Committee. Training and
Audit Committee
6 March 2012
familiarity with the detail of the Statement of Accounts for 2010-11 concentrated
significantly on the adoption and consequences of the International Financial Reporting
Standards.
4.3. The detail of the Statement of Accounts and how it is prepared where not the main
focus for the Committee in respect of the 2010-11 accounts.
4.4. Keeping committee members up to date with developments in the field of audit and in
particular legal and regulatory changes has improved with pre agenda briefing of the
Chair and circulation to Members by e-mail of audit commentaries and developments in
local government finance generally.
5. Internal Audit
5.1. The main area of concern here relates to the private discussions between the
committee and the Head of Internal Audit. Generally Members felt more comfortable
with such meetings being arranged between the Committee Chair and the Head of
Internal Audit.
6. External Audit
6.1. Again the question of private discussions with the External Auditor received a similar
response to those in 5.1 above relating to the Head of Internal Audit
6.2. However Members also noted that there was no structured assessment of the
performance of the external auditor.
7. Administration
7.1. The question covering “Any other Business” indicated that the process for dealing with
this area of the agenda was not explicitly understood and needs to be addressed for the
benefit of the Committee. The adoption of a formal framework to deal with requests is a
matter for Democratic Services to resolve within the Council’s Constitution.
8. Actions
8.1. Following on from the self assessment exercise there are a number of actions that need
to be undertaken. Some of the responses can be accommodated by clarification of
processes for example, clarifying procedures and improving access to audit matters
from CIPFA, the Audit Commission and External Auditors.
8.2. It is clear that further training for members is necessary. In particular the area around
the composition, production and content of the Statement of Accounts needs urgent
attention. This could be supplemented by a more general session to provide context to
not only local government finance but the overall operation of the Council. Such a
supplementary session would take the member Iiduction a stage further and focus on
this from the perspective of the Audit Committee.
8.3. Dealing with the assessment of the external auditor will require the application of an
assessment framework. Such an assessment framework needs to be developed but
might usefully include:
8.3.1. the value and occurrence of material misstatements
8.3.2. actual audit resources compared with the budget (both financial and man days)
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6 March 2012
8.3.3. activity levels between preparation time, auditing and report preparation etc.
9. Conclusion
9.1. By addressing the questions in the self assessment that elicited a “No” answer and
reviewing those where the consensus was split “?” it is anticipated that the work and
output of the Committee will be strengthened and enhanced.
10. Recommendation
10.1.
That members note the content of this report and commission Officers to provide
the improvements noted in section eight (Actions)